Wednesday, November 20, 2013

How the American People
Have Lost Sovereignty, Part Two

In the first article the gradual rise of
the Corporate Personhood was detailed, showing how there is a correlation
between the rights that corporations have gained over the years through Supreme
Court rulings and limitations placed upon legislators when trying to create
laws for the benefit of society, for fear of lawsuits by corporations.In this article the Federal Reserve will be
analyzed, showing that the federal government gave up sovereignty over money
policy in a completely unconstitutional way.

The Federal Reserve was created in 1913
by Congress, and signed by Woodrow Wilson, as a way to centralize the banking
system, which the Democrats had promised to do if elected.The problem is that the Constitution puts
that responsibility on Congress;

“Section. 8.

The Congress shall have Power To lay and
collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for
the common Defence and general Welfare of the United States; but all Duties,
Imposts and Excises shall be uniform throughout the United States;

·To coin Money, regulate the Value thereof, and of foreign
Coin, and fix the Standard of Weights and Measures;”

The Constitution was never amended to transfer
this responsibility, let alone to a private corporation.In all likelihood this is because there would
be far too much opposition.It was a
shameful abrogation of the sovereign power of the people by those who were
merely holding the reigns for a brief time.Wilson and his Democrats decided to ignore the Constitutional
implications, since they did not even attempt to amend the Constitution, and
the Supreme Court has again proven to be stewards of the people in the way that
a wolf is a steward of sheep.

The first thing that needs to be
understood, for its importance cannot be understated, is that the Federal
Reserve is a privately owned corporation that pays dividends to stockholders.In order to be a bank in the United States,
the bank must purchase stock in the Federal Reserve.Federal Reserve stocks are not available to
people, though many of the banks who own stock in the Federal Reserve are
publicly traded corporations, and those stocks can be owned by people.Although the Federal Reserve is a private
corporation, it also has to deal with the government in certain ways.The President chooses who the Federal Reserve
Chairman is, though he must pick from choices provided by the Federal Reserve,
and the Chairman must report to Congress and the Government Accountability
Office.Congress can advise the Chairman
of the Federal Reserve, but he can ignore that advice without repercussions.

The Chairman of the Federal Reserve gets
to set monetary policy, and he does this in two basic ways.One, he sets the rate which banks must hold
depositors money on hand.In other
words, if the rate is set at 10%, then a bank can lend out 90% of the money
that is deposited in the bank, but must keep 10% on hand, in case depositors
wish to withdraw money. In this way
banks only have to keep a percentage of their customers’ money, and the rest
can be leant out for interest, which creates the illusion that there is more
money in the system than there really is, because the money that is lent out
eventually makes its way back into a bank, which then lends out 90%, repeating
the process over and over again.This is
called fractal reserve lending, and it is, at the logical heart of it, a
pyramid scheme.It works so long as
people believe it will work.Once people
lose faith it falls apart rapidly.

The second way the Federal Reserve
controls monetary policy is by setting the federal funds rate, which is the
rate of interest that banks who are part of the Federal Reserve can borrow
money from the Federal Reserve.When a
bank needs money, it borrows it from the Federal Reserve.The interest rate is normally ridiculously
low (.25% for 2013).Banks turn around
and lend this money out to people at a much higher rate.The money that the Federal Reserve lends to
the banks is created when the banks ask for it.When this is done the Federal Reserve tacks on a fee for the transaction
(about 6%), and that accounts for the profits of the Federal Reserve.At the end of the year all of the profits are
sent back to the Treasury…except for 6%, which is paid out as dividends to the
stockholders (aka the banks).The same
banks that borrowed the money from the Federal Reserve own the Federal
Reserve.So they borrowed from
themselves; in reality adding more US dollars to the system, thereby lessening
the value of all the dollars that were already in existence…and making six
percent on the deal on top of everything else.

If this analysis were true, we should
expect that the US dollar would have lost value continuously since the creation
of the Federal Reserve, as that six percent tacked on at the creation of
currency slowly erodes the value of that currency.That is indeed the case. The US dollar has
lost over 60% of its value compared to the British pound since the creation of
the Federal Reserve one hundred years ago.

Unfortunately corruption is the mortar
that holds the Federal Reserve System together.Banks have manipulated their positions on the boards of the Federal
Reserve to funnel money into their corporate coffers, at the expense of the
American economy.Jamie Diamond was the
CEO of JP Morgan-Chase at the same time that he was on the Federal Reserve
board, and while on the board of the Federal Reserve he orchestrated a bailout
of JP Morgan-Chase.There can be no
clearer indication that there is a conflict of interest.In the same time period Lehman Brothers was
allowed to file chapter 11.Of course,
the CEO of Lehman Brothers, Joe Gregory, did not sit on the Federal Reserve
board.

The Constitution clearly assigns
responsibility for monetary policy to Congress.The Constitution has clearly not been amended to allow that
responsibility to be transferred, in all likelihood because the American people
would not stand for it if they understood what was being done.The Federal Reserve constantly erodes the
value of US currency with the six percent profit that is sent to Federal
Reserve stockholders (banks), and is not bound by policy expectations of the
elected government.If Congress and the
President decide on one course of action, but the Federal Reserve disagrees
with that course, it can work against the intent of the elected
government.The President can remove the
sitting Chairman and choose a new one…but the Federal Reserve selects the
people that the President gets to choose from.

What is interesting is that no one has
challenged the legitimacy of the Federal Reserve at the Supreme Court
level.It seems highly unlikely that it
could survive such a challenge…though the history of the United States Supreme
Court is one of a long list of awful decisions that have eroded the power of
the American democracy.The reality is
that a small cadre of insiders is calling the shots for America’s financial
system.They disguise their actions out
in the open, using byzantine logic and industry-specific jargon to confuse
people, all the while eroding the foundation of American society.

About Me

I was born in Montreal, grew up in Toronto, lived in Japan and New York, and now I am back in Montreal. I was in the military (First Hussars Armoured Regiment), studied Kendo and Ninjutsu, have traveled a great deal, and love history.